(Bloomberg) — Oil extended gains toward $60 a barrel in early Asian trading as global supplies tighten and the demand outlook improves with the rollout of Covid-19 vaccines.
Futures in London climbed 0.8% after capping a third weekly gain. The number of vessels sailing toward China jumped to a six-month high on Friday, signaling robust demand from the world’s largest importer. Key prompt timespreads for the global benchmark and have recently firmed in a bullish backwardation structure, indicating shrinking stockpiles.
See also: Oil’s Remarkable Rebound From a Year of Catastrophe
Top independent trader Vitol SA, meanwhile, joined with rival Gunvor Group Ltd. in expressing caution about the recent surge in prices, while a technical indicator is showing that oil is overbought and due for a correction.
Oil has rallied about 60% since the end of October amid coronavirus vaccine breakthroughs and after Saudi Arabia pledged to deepen output cuts. There are still concerns about near-term demand, with a new virus variant spreading in the U.S. and other regions across the world grappling with lockdowns.
Brent’s prompt timespread was 27 cents in backwardation — where near-dated prices are more expensive than later-dated ones — compared with a 7-cent contango at the start of the year.
©2021 Bloomberg L.P.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Need Your Help Today. Your $1 can change life.